Ukrainian Fund of Funds plans to invest in 15-20 venture capital funds
MOSCOW. May 8 (Interfax) - The Ukrainian Fund of Funds (FoF), whose expected initial size is $300 million, plans to invest in at least 15-20 Ukrainian venture capital (VC) funds, Ukrainian media cited FoF Manager Ertan Can as saying at the EU-Ukraine 2024 business forum in Brussels.
"We can improve the Ukrainian ecosystem of venture capital by building a fund of funds solely focused on Ukrainian VCs and funds that are investing partially in Ukrainian founders. We plan to invest at the beginning probably in 15 to 20 Ukrainian VCs as an anchor," Can said.
"If someone wants to create a VC ecosystem for Ukraine as quickly as possible, it is impossible without the clear anchor mandates. From my experience over the past 11 years, if Ukrainian VC managers today start to look for an anchor investor for newly created or still early funds, it will be almost impossible to create that ecosystem within one or two years," he said.
The solution to this problem is the creation of the Fund of Funds that would be playing the anchor role in those 15-20 VC funds "that will be created hopefully for the Ukrainian ecosystem within the next one or two years," Can said.
As for investing in Ukrainian VC funds, it is more of cooperation than competition, he said.
"It will be clear cooperation of all mandates, hopefully of more mandates together. And I don't see a way of competition, at least not from an investor or LP [Limited Partners] perspective," Can said.
Andrei Kolodyuk, chairman of the Supervisory Board of the Ukrainian Venture Capital and Private Equity Association (UVCA), in turn, said that "the expected initial FoF size is $300 million".
According to the UVCA, there are currently 16 Ukrainian funds that are actively raising capital and in which the Ukrainian FoF intends to act as the primary institutional investors. They are AVentures Capital, ICU Ventures, Freedom One VC, Digital Future, Flashpoint, One Way Ventures, FfVC, Ukrainian Phoenix Fund, ZAZ Ventures, Network VC, 3X Capital, Flyer One Ventures, SID Venture Partners, 1991 Ventures, Rada Capital, and Green Flag Ventures, whose cumulative demand for financing for subsequent use is estimated at $800 million.
There are also around 50 foreign funds that are based in, focused on or interested in the markets of Central and Eastern Europe and could benefit from the advantages offered by the Ukrainian FoF, including comprehensive checks and analysis of the most efficient funds for investing.
Today's Ukrainian VC funds do not have institutional investors such as the European Bank for Reconstruction and Development, International Finance Corporation and others that raise capital, while the goal of the Ukrainian FoF is to become the primary institutional anchor investors with the initial share of 30%+ so that funds have a better chance of raising the remaining 70%, it said.
Ukrainian FoF investors are expected to participate in managing the fund in a transparent and competitive way, and the investment committee will include well-known experts.
Unlike the original idea, when the government also announced plans to financing the Ukrainian FoF, the fund was created without the government's participation and is fully independent, but the state will be able to invest in it in the future on a par with other participants, Kolodyuk said.
Ertan Can has a combined 20 years' experience of asset management, fund of funds, VC and information technology operating roles. Can is the founding managing partner of Multiple Capital, launched in 2018 and pioneering tech-focused micro-VCs in Europe. Multiple Capital has invested in 48 funds to date.